Cook, who steps down as CEO on Sept. 1, said Apple's hybrid AI approach is an advantage as rivals rely on massive cloud infrastructure
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Apple $AAPL CEO Tim Cook described the company's on-device AI strategy as a strategic advantage over cloud-dependent rivals on Thursday, in what was his final earnings call before handing over the chief executive role, according to CNBC. "The ability to run some percentage of requests on device is also very strategic and sort of a competitive weapon," Cook said.
Cook, who transitions to the executive chairman role on Sept. 1, told investors the company sees "enormous opportunities" ahead in artificial intelligence. His comments centered on Apple's hybrid approach, in which AI workloads can be processed on iPhones and Macs using Apple's own chips rather than sent to remote servers, while more complex tasks are routed to cloud infrastructure.
Unlike its hyperscaler peers, Apple has kept its capital spending comparatively modest. Its capex for the June quarter totaled $2.46 billion, a fraction of what Alphabet $GOOGL, Amazon $AMZN, Meta $META, and Microsoft $MSFT are each projected to deploy — all of them having pledged well over $100 billion for the year. Cook noted that Apple's operating expenses are rising. "We have been growing our opex and spending more in AI in general," he said.
Cook pointed to Disney $DIS as a case in point, noting that its "creative teams are increasingly turning to Mac for on-device AI workflows that reduce overall cloud token costs and keep their IP secure."
The on-device strategy will face a practical test when Apple releases an updated Siri this fall. When requests exceed what on-device models can handle — image generation among them — Apple has said it will route those queries through Google Cloud. Apple has also floated tying heavier AI usage to iCloud subscriptions as a potential revenue stream, even as Cook admitted the company has not finalized how it will charge users. "We do believe there will be people that want to use it a lot, and so we will have some kind of upgrade possibilities on iCloud+," he said.
Cook announced in April that he would step down as CEO after 15 years, with hardware engineering chief John Ternus set to succeed him. Ternus inherits a company that has faced criticism over its pace in generative AI and the prolonged delay of a rebuilt Siri.
Apple has also been dealing with supply-side pressures. Cook warned earlier this year that memory and storage chip cost increases had become unsustainable, saying price increases on Apple products were "unavoidable" as fierce demand from AI infrastructure buildouts drove up component costs.
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